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Learning From Others Failures
One of the biggest lessons that we can get from the late 1990s was the implosion of many dot com companies. The technology of the Internet made it possible for just about anyone with little business or financial expertise to slap a website on as a "virtual company" and claim they were in business.
With venture capitalists being very eager to get into the online market, startup capital was very easy to come by during that time. Unfortunately, many of the business plans were not well thought out. Young entrepreneurs with technological savvy found it much more difficult to parlay their knowledge into working marketable ventures than they thought.
Ingenious ideas for ordering online and delivering groceries (Webvan.com), buying pet food online (Pets.com), and getting scents transmitted over the Internet (Digiscents.com) came and went almost overnight. Often the virtual businesses never made a single penny in profit before they had spent a vast amount of money loaned by angel investors.
While there were some that took stock of how different the online markets were to retail brick-and-mortar stores and were able to adapt to the new environment (Amazon.com, eBay.com), many more were failing secretly and were hoping that investors would buy them out in an IPO (initial public offering) before they went bankrupt. For that reason, they were soon to be known as dot cons or dot bombs.
As the viability of online business models began to be questioned, the stock market took a dive and technology stocks plummeted. The result was the bankruptcy of many dot com companies - but, not before a ton of money was lost.
Everyone was questioning online businesses and the Internet (once the darling of investors) and web ventures quickly turned from a smart investment into a foolish investment overnight. Venture capital dried up and now those that enter this area have much more difficulty establishing credibility than before the dot com bust.
So, what went wrong? The dot coms appeared to have it all worked out. They had some great business ideas. They had solid venture capital. They had technically knowledgeable people. What they didn't have were people with good business sense, how to run an organization, and an understanding of the market needs.
Instead of meeting a market demand, they were creating products with no research on how their product would be received by the public. They assume a good product would sell just because it was advertised on the Internet, even when there was no demand for it.
The lesson we can take from the dot com failures is that nothing makes up for improper business training. We can be a genius technically. We can have all the money in the world to get our product to the market. We can even have a one of a kind, unique product.
However, if we have no idea how to run a business and manage the cash flow and expenditures, we are doomed to fail due to lack of common sense and business know-how. Learning how to run a business, whether it is online or not, is a key factor to your success.
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